IMF advises FBR to increase tax on salaried classes to stabilize the country's finances.

The International Monetary Fund (IMF) has urged the Federal Board of Revenue (FBR) in Pakistan to implement significant tax reforms to increase revenue from both the salaried and non-salaried classes.

The IMF’s proposal includes reducing the number of tax slabs from seven to four and removing tax exemptions on employer contributions to pension funds. This move is intended to address the disparity between different income groups and simplify the tax system for greater efficiency.

According to the IMF, implementing these changes could potentially boost the country’s revenue by an additional 0.5 percent of GDP, approximately Rs500 billion annually. The FBR has collected Rs215 billion from the salaried class in the first eight months of the fiscal year. With the proposed reforms, this figure is expected to see a significant increase, along with additional gains from the elimination of tax exemptions and preferential treatments.

The IMF asserts that these adjustments will contribute to establishing a fairer and more efficient tax framework, ultimately supporting economic stability and growth in Pakistan.

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